Launching and Financing Your Social Enterprise Empowering People to Change the World Funding and Mentoring Entrepreneurs DRAFT October 7, 2009 February 2013
Agenda • Background on Draper Richards Kaplan • The Funding Landscape • The Funding Process • Things to Consider • Q&A 2
Background on Draper Richards Kaplan DRK is a Venture Philanthropy firm founded in 2002 by Jenny Shilling- • Stein along with Venture Capital veterans Bill Draper and Robin Richards. DRK is an early-stage, high-touch funder of social innovation: • “ We invest in social entrepreneurs who change the world.” DRK operates like a venture capital firm: • – Raises funds from limited partners (and spends down over 5-7 yrs) – Provides capital to early stage organizations ($100K/yr x 3years) – Provides strategic and operational support beyond the capital • DRK has funded 49 organizations to date: – Issue-area agnostic – Geographically agnostic – Focused on early stage – Highly-selective (<2% acceptance) 3
Background on Draper Richards Kaplan: Business Models in DRK Portfolio Tightest management /least speed Loosest management /greatest speed Curriculum Full management Franchise Partnership Network distribution • Organization fully • Organization • Organization • Organization • Organization manages licenses licenses other authorizes use of grows through operations at all management of organizations to its model through spread of ideas sites operations as part employ model as distribution of through loose of a single network part of their own curriculum to network of network other individuals/ organizations organizations • Room to Read • VisionSpring • Grassroot Soccer • Little Kids Rock • Genocide Intervention Network • Design that Matters • One Acre Fund • Living Goods • Spark • Education Pioneers • Kiva • The Mission Continues 4
Agenda • Background on Draper Richards Kaplan • The Funding Landscape • The Funding Process • Things to Consider • Q&A 5
The Funding Landscape: Sources, Dynamics and Considerations Funding Sources • – Individuals – Foundations – Corporations – Government Entities – Other Non-Profit Organizations – Earned Revenue Note: Highly successful non-profits have a concentrated funding mix – Funder Dynamics • Focus on issue area – Focus on target demographic – Focus on geography – Focus on stage of growth – Focus on earned revenue/sustainability – Funder type considerations • Restricted vs. Unrestricted – Reporting requirements – High-touch / Low-touch / No-touch – Potential funding source(s) will influence legal structure – 6
The Funding Landscape: Sampling Of Venture Philanthropy Firms “Draper Richards Kaplan provides high level of support to very early stage social ventures” Engagement level Funding stage Note: Bubble size indicates relative average total grant size to social venture Source: Foundation Center Directory; Organization websites
Agenda • Background on Draper Richards Kaplan • The Funding Landscape • The Funding Process • Things to Consider • Q&A 8
The Funding Process: Practically Speaking… DRK timeline is 4-6 months • DRK required documents: • – Grant application – Resume – Theory of Change – Development Pipeline – Operating/Business Plan DRK steps along the way… • – Reviewing the application – Interviewing: the social entrepreneur, management team, the board, extended network, “Outside the tent” sector experts – Developing metrics and milestones for the grant 9
The Funding Process: What DRK Looks For 1 2 3 Entrepreneurial Scalable Sustainable Facet of strong leadership model impact organization • Does the entrepreneur exhibit • Is the model scalable? • Is the entrepreneur’s idea characteristics of exceptional important? leadership? • Does the idea meet a pressing • Is the model replicable? • Can the entrepreneur handle need? • Is there service demand and challenges? • Does it fill a gap that is not dollars available for this model • Manage people? already met? Key questions in additional areas such as • Communicate effectively? • Is it uniquely suited to fill that other fields, geographies, methods of service delivery gap? • Strategically assess (e.g. advocacy, media, etc)? opportunities? • Will the impact reach beyond • Is there an ongoing revenue the direct program • Recruit board members? source to support this work? beneficiaries (e.g. family members, communities, future generations)? • Improved staff and board • • Catalytic budget growth Increased social impact Measure of strength success • Sustainable revenue 10
The Funding Process: Leadership We evaluate leadership by assessing an individuals capability to solve a pressing social need. Identify/articulate a definite need • Visionary managers who can build an organization • • Focused on clear impact Pursue long-range growth/evolution possibilities • Proven entrepreneurial qualities (i.e. magnet for resources) • Have relevant issue expertise • 11
The Funding Process: Scale If a leader can build a strong organization from the beginning, the organization has a much better chance at scaled and sustainable impact. • Ideas that can be implemented with reasonable money, feasible plans and team, Models that produce tangible results – Where’s the leverage (e.g. technology, • volunteers)? What is it enhancing/replacing? Scaling strategy • – Impact: Where are you going next? – Organization How are you building your organization? – Revenue Model: How will you increase revenues to match organization expenses? 12
The Funding Process: Impact We look for leveraged solutions that create lasting positive change. We look for game-changing ideas that create better opportunities and outcomes for the future. Does it directly address the need of the target population the • organization seeks to serve? Will the program create systemic change? • What are your specific impact results intended for the three year term of • the grant and generally beyond? How are you measuring, monitoring, and evaluating your impact? • How do your impact metrics link back to your theory of change? • 13
Agenda • Background on Draper Richards Kaplan • The Funding Landscape • The Funding Process • Things to Consider • Q&A 14
Things to Consider Identify real problems • Talk to the people with those problems (as well as veterans in your field) • • Analyze the competitive landscape (i.e. don’t assume that your solution will work or is unique. Consider joining an existing org or being an intrapreneur – many paths to • having an impact • Develop a theory of change to layout inputs, short term and long term outcomes, and ultimate impact BEFORE you pilot... will make selling your program’s vision much easier ! Develop a business model… not just a program model • Identify who would be willing to pay – Test your assumptions – Do not feel constrained by current systems • 15
Things to Consider Know your funder before you walk in the door – do the research • Balance refining the program model with developing organizational • capacity Spend time building, informing, and leveraging your board (i.e. TTT / • WWW) Maintain a learning orientation (don’t think that you have all the • answers) Keep your own counsel • Go do it – get away from the white board and do it • – Don’t over analyze – Fail Faster: You’ll learn more/faster by doing, than thinking 16
Q&A Thank you! Tom Fry, Draper Richards Kaplan Foundation 17
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